The Federal Reserve Bank announced Wednesday afternoon it will not raise the federal funds rate in the near future.
The federal funds rate is the overnight rate on loans between banks, and it is effectively the single most influential interest rate in the U.S. economy, as it has widespread affects on domestic monetary and financial conditions. The fed rate bears on employment, economic growth, and inflation.
The central bank said Wednesday that the Committee decided to “maintain the target range for the federal funds rate at 1/2 to 3/4 percent.” The central bank economists state the decision to keep the funds rate steady comes after the economy did not meet the Fed’s goal of 2 percent inflation set last December.
In its determinations of any future rate increases, the Fed said that it would assess economic conditions at that time, and future periods, relative to its goal of full employment and 2 percent inflation.
The Committee did note some net-positives for the U.S. economy, including: improved job growth, lowering unemployment, and increased household spending and investment.
The Fed raised interest rates last December, marking only the second increase in the fed funds rate since June 2006. The Fed reduced interest rates to near zero during the 2007 financial crisis, where they have remained.
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